Scoop, on 6 December 2005 - 12:00am by Simon

from http://www.vibewire.net/3/node/4424

On a recent trip to Thailand, Simon Moss caught up with the World Bank’s country economist for Thailand, Kirida Bhaopichitr to talk about development, poverty and the role of the World Bank.

What do you do at the World Bank?

I’m the country economist for Thailand. What a country economist does for a country like Thailand, which is a middle income country, is that we monitor the economic development and macroeconomic factors.

What does the World Bank think is the best way to pull people out of poverty?

The World Bank has been working in many countries to help them to alleviate poverty. First of all we have to understand that each country is different, and alleviating poverty in each country will be different. Of course promoting growth is definitely one area that will help to reduce poverty and the World Bank is involved in making sure that the growth in these countries is sustained. A second thing is that we also have people who work on issues of poverty reduction on a sectoral base.

We know, for example, that having more educated people in a country or having people with better health in a country – that helps in the longer term. At the same time, for those who are in poverty today, giving them better training or giving them healthcare or giving them other opportunities for jobs will also help pull them out of poverty as well. So the World Bank has been involved in all these areas, both at the macro level of promoting growth and the sectoral aspects in working with governments, NGOs and academic institutions in order to promote poverty reduction.

Whilst in Bangkok, I haven’t really seen any extreme poverty – the $1US a day figure that the World Bank and the UN use. Is extreme poverty an issue in Thailand?

The poverty line that the World Bank uses across the world for cross-country comparison is $1 a day. Thailand has its own poverty line, and that’s just because $1 a day might be a lot for some countries and not a lot for others. To compute the poverty line you really need a lot of information about the level of money that people need to survive.

The level in Thailand right now, it’s just been revised, is 1000 Baht per person per month.

That’s about US$25 per month, correct?

Right. So, when we’re talking about the number of people below that poverty line, in 2004 about 12% of the total population was below that line. So, 12% of 63 million - that’s more than 6 million people under this poverty line. It’s not a very high number compared to other less developed or developing countries, but 6 million people – that’s still a huge number of people.

Quite a few people in countries like Australia say that free trade means that lots of Australia’s manufacturing jobs go to countries like Thailand. What do you make of this concern?

First of all, let’s say if it were a valid concern, then Thailand and Australia would have never done a free trade agreement. The Thailand-Australia agreement is the first free trade agreement that Thailand has done with a developed country, so obviously there is scope for trade between Thailand and Australia.

To say that if Australia opens up to Thai exports, then factories back in Australia will all be driven out of business is probably too exaggerated, because the things that Thailand produces and the things that Australia produces are actually quite different, and actually our production can complement each other. There are things that Thailand produces that Australia needs, and things that Australia can produce cheaper that Thailand needs, so I don’t think Australian manufacturing will be driven out of business.

The labour movement in Australia has argued that opening up markets through things like free trade agreements are quite often too narrow, in that working conditions in other countries aren’t sufficient and that many of these factories mistreat their workers. From what you’ve seen, is this valid?

If you’re talking about Thailand, or any developing country in general, then yes we see that the working conditions in the manufacturing sector are not as high as those in developed countries - that’s true everywhere. But as countries become more developed, and also as more low-income countries sign up to international standards – which are sometimes required for them to export or they’ll face barriers – then countries will eventually improve their workers’ conditions.

One of the most common criticisms of the World Bank is that many of the big projects, like dams, might have been good theoretical economic ideas, but on the ground they destroyed the lives of a lot of local people. In your experience, has the World Bank done that before, and if so, how has it changed?

I would say that the World Bank has learnt a lot from its mega-investment projects that we have either funded or supported in the past. And we have come quite a long way from that, and have learnt our lesson on how to best implement these projects in developing countries.

As you know, we have a big dam project in Laos right now, called the Nam Theun 2 project, and that will actually bring in about half of Laos’ GDP in terms of income to Laos. So, it's a really big project that the Laos Government really wants and the Laotian people are really looking forward to, because that now will enable them to sell electricity to Thailand and will bring in foreign currency and more income for them to buy what they need.

Because the World Bank has learnt its lessons from the past about what went wrong in these sorts of projects, this dam has seen very wide consultations with locals in Laos in that particular area that will be flooded by the dam. There have also been extensive consultations with NGOs and lots of studies on how to preserve the biodiversity of the areas that will be affected and areas that will not be affected.

To build a dam now is a big process in the World Bank because you have to go through like 10 stages. And one of those is that people who are relocated must be given a new place to live and they must volunteer to move. Jim Wolfensohn [then head of the World Bank] last year went to Laos and went to visit some of these villages who are going to be moved, and they actually told him - I saw the video - they actually said to him "we have been waiting for so long, when can we get to move?"

In the past we've had World Bank investment in big infrastructure projects like dams, roads and electricity plants. What's the current focus for the World Bank?

The mission of the World Bank today is a world free of poverty. So our mission is to eradicate poverty. In the past, yes, we were focused on building infrastructure which is beneficial to developing countries because a lack of infrastructure is one of the things that was constraining developing countries from developing.

After that phase, we realised that other softer areas - like health and education - are still a problem in developing countries. So the focus now for the World Bank is on poverty reduction and ways to reduce poverty through things including education systems, health systems, public sector service delivery and other aspects – but they all tie into poverty reduction.

It’s a long way from the macroeconomic realm of the World Bank to the community development agencies. How does the World Bank maintain that link?

In order for the World Bank to fulfil our mission, then we have to work with communities. So although I as a macroeconomist don’t have too much to do with communities, if you talk to my colleagues who are sector people – who work in health, education or environment, they actually work very closely with the communities because we now have a community driven development (CDD) strategy.

For example, my environment colleagues working on the tsunami disaster from the end of last year. The World Bank has a pool of grant money that we provide, but instead of providing to a government agency that would help communities, we actually provide that money directly to the communities and they themselves come up with the plan on how they will use that money to develop and rebuild the community.

So, we have both people like me and people on the ground.

What advice or words of encouragement would you have for young people who are interested in development as an area, but who might not know a huge amount?

As you know, development is such a broad field, so there’s lots of scope for young people to get their hands on and be involved in this area. I would say first you need understand what development involves. It’s not just giving money to poor countries, it’s more than that. There are so many more aspects to development.

And then I think what’s really important is to have hands on experience - to have actually worked on a project or in a country. That helps promote development and that’s the best way to get involved.